Mileage tracking is the act of documenting business use of a vehicle. The IRS has strict mileage deductions regulations and will disallow improperly documented mileage and auto repair expenses.
Due to the strict IRS regulations, mileage tracking is a commonly missed deduction. There is a limit to the dollar amount of deduction allowed for auto expenses. Only a percentage of the auto expenses are actually deductible when using a vehicle for business and personal use.
Many of my customers gasp, at the end of the year, once they realize the amount of the lost deduction from poor record keeping. There’s good news! I am going to give you steps to properly document your mileage to save you thousands of dollars.
You can use the following guidelines for tracking mileage, If you drive your car for your business or if you are an employee and you use your vehicle for your job.
1. Record Odometer Readings:
Record your odometer reading of the vehicle from the start/ending of every trip. The difference is the miles driven for a business trip.
2. Record the number of miles driven to and from a business event.
3. Document the business event/meeting address /location
I use an app as well as print a Google map, even if I know the trip destination, and I feel confident the mileage matches the map and the app documents the address, location, and beginning and ending odometer reading.
4. Properly list the business reason for the meeting
Networking is advertising and/or connections. Your goal, at networking meetings, is to build clientele as well as referral connections to support your clients. This is a business purpose. A PTA meeting is not networking. This is a personal meeting. Meeting clients or partners to discuss your services/products. Attending an event for which you managed as part of your services is a business event. This would include planning meetings, financial, legal, employee, contractors, training and any item associated with your business.
5. Date and Time
The date and time of the meeting are important. It should coincide with the meeting miles
6. Record the name of the person, client, partner, etc. of whom you are meeting.
Meetings with partners, clients, professionals, i.e. accountants and or lawyers, designers, and other consultants
Qualified documentation is a log, spreadsheet or an app. An app makes it easier! Consider training on an app.
Tracking mileage will become a habit with practice! You will save thousands of dollars from miles driven and expenses by a few simple mileage tracking steps.
Tip: Exceptions for Non-Business Mileage Deductions
The IRS allows non-business related mileage deduction for medical travel – Driving someone back and form between facilities to help them. Travel to deliver a person or items to assist qualified charitable organizations. Travel for a recommended physician for out of state travel for individual illness.
There are two other options for mileage tracking. MileIQ and Taxbot. MileIQ will count personal trips as part of your free 40 trips. You will have to update your trips online if you do not pay the $60 a year.